Financial Mathematics Review Questions with Complete Solutions Rated 100%
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Course
Financial Mathematics
Institution
Financial Mathematics
Financial Mathematics Review Questions with Complete Solutions Rated 100%
simple interest - Answers if the interest charged is base merely on the principal but is paid at the end of the term
focal date - Answers the point on the timeline when several pieces of money are valued in order to compar...
Financial Mathematics Review Questions with Complete Solutions Rated 100%
simple interest - Answers if the interest charged is base merely on the principal but is paid at the end of
the term
focal date - Answers the point on the timeline when several pieces of money are valued in order to
compare or add them (t=0)
time value of money - Answers the principle that, because of interest, the value of a given piece of
money changes as its location in the timeline changes, increasing when moved to the future and
decreasing when moved to the past
interest - Answers cost or charge for the use of borrowed money
principal - Answers amount of money invested or borrowed
interest rate - Answers percent of the principal that is the basis for the interest
term - Answers length of the loan in time units corresponding to the rate
promissory note - Answers document on which one party (the payer) writes his of her promise to pay
another party (the payee)the principal and interest for a loan due at some date in the future
maturity date - Answers the date that a promissory note or other maturing security must be repaid
maturity value - Answers the amount of money the borrower will pay back (principal + interest)
I = - Answers Pit
S = - Answers P(1 + it)
P = - Answers S/ (1 + it)
exact time - Answers everyday of the term except the first day (subtracting serial numbers)
approximate time - Answers each month is assumed to be 30 days
ordinary interest - Answers the length of a year is assumed to be 360 days
exact interest - Answers the length of a year is taken as 365 days
Banker's Rule - Answers exact time and ordinary interest; find serial numbers and subtract to find total
number of days then divide by 360 to find time
golden rule of finance - Answers monies cannot be added of compared unless they are valued at the
same point in time
average due date - Answers the date at which a single payment equal to the sum of several obligations
will discharge those obligations; not a function of the interest rate unless it is zero
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